Samsung to pay $300 million fine for price fixing

Thursday, October 13th 2005, 11:58 am
By: News On 6

WASHINGTON (AP) -- Samsung, the world's largest maker of memory chips for computers and other electronic gadgets, will plead guilty to price fixing and pay a $300 million fine, federal officials announced Thursday.

The penalty is the second-largest criminal antitrust fine in history and caps a three-year investigation of the largest makers of "dynamic random access memory" chips, a $7.7 billion market in the United States.

The guilty plea by South Korea-based Samsung Electronics Co. Ltd. and its U.S. subsidiary, Samsung Semiconductor Inc., was to be entered Thursday in U.S. District Court in San Francisco.

The Justice Department already has secured guilty pleas from two other companies and collected more than $345 million in fines.

"Price-fixing threatens our free market system, stifles innovation and robs American consumers of the benefit of competitive prices," Attorney General Alberto Gonzales said.

A Samsung spokesman declined to comment immediately.

Samsung received grand jury subpoenas in connection with the investigation during 2002, and put aside $100 million late last year to pay potential criminal penalties.

Samsung's top competitor, Seoul-based Hynix, agreed earlier this year to plead guilty to price fixing and pay a $185 million fine. Last September, rival Infineon Technologies AG of Germany agreed to a $160 million fine.

The government accused the companies of conspiring in e-mails, telephone calls and face-to-face meetings to fix prices of memory chips between April 1999 and June 2002. The chips are used in digital recorders, personal computers, printers, video recorders, mobile phones and many other electronics.

The government said the victims of the alleged price-fixing were Dell Inc., Compaq Computer Corp., Hewlett-Packard Co., Apple Computer Inc., International Business Machines Corp., and Gateway Inc.

The investigation started in 2002, a year after memory chip prices began to climb even though the high-tech industry was in a tailspin. At the time, the hikes were attributed to tight supplies, although then-Dell Computer CEO Michael Dell blamed them on cartel-like behavior by chip makers.